Concessional duty under Notification No. 1/2011-CE was available after reversal of attributable CENVAT credit.

Eligibility for the 1% concessional duty rate under Notification No. 1/2011-CE depended on compliance with the condition against availment of CENVAT credit. The assessee had initially taken credit on inputs and input services but later reversed the proportionate credit attributable to the exempted goods and paid interest, which was supported by verification. That reversal was treated as sufficient compliance with the notification condition, so the exclusion from exemption could not be sustained and the demand failed.

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Issues: Whether the assessee was entitled to the concessional rate of duty of 1% under Notification No. 1/2011-CE on fruit pulp or fruit juice based drinks after reversing the CENVAT credit attributable to the exempted goods.

Analysis: The applicable scheme permitted either duty at 1% under Notification No. 1/2011-CE subject to availment of CENVAT credit on inputs and input services, or duty at 5% under Notification No. 2/2011-CE without such restriction. The assessee had initially availed credit but later reversed the proportionate credit of Rs. 42,00,866/- and paid interest thereon. The reversal was supported by the verification report and was treated as compliance with the condition against availment of credit. On that basis, the exclusion from exemption could not be sustained.

Conclusion: The assessee was eligible for the 1% concessional rate under Notification No. 1/2011-CE, and the demand could not be sustained on the ground of prior credit availment after reversal.

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